Top tips for investing well in the stock market in 2023

From day one, the investor journey is fraught with obstacles. To help you overcome all these difficulties, here are our tips to start investing in the stock market in the best conditions .

Financial investment contributes to your financial wealth, but also to economic growth on a national and global scale. To make your positions work for both you and the economy in the long run, here are some tips for investing well in the stock market.

Be clear about your motivations

Before you even start investing in the stock market, the first thing you need to do is be honest with yourself. So ask yourself clearly: “Why am I investing?” and take the time to answer this question clearly and honestly.

Some profiles favor short-term speculation in the financial markets to take advantage of stock market fluctuations, while others prefer to invest for the long term to not only see their wealth prosper, but also to support the economy.

Train yourself to master the basics

Although when investing, training never really stops, you'll have to start somewhere. To familiarize you with the world of investing, there are many free training courses available online.

In particular, you can consult video tutorials and case studies, articles and training on broker sites or more specialized forums. To gain solid knowledge, you can also take paid business training. However, be careful, expensive training is not a guarantee of quality. The basics of what you need to know to start investing shouldn't cost you more than $100.

Start investing in the stock market with a demo account

Once you have acquired the fundamentals during your initial training, it is time to transform your theoretical knowledge into practical skills; and for that, nothing like going through a demo account. This approach has several advantages:
  • become familiar with how a trading platform works;
  • learn about the practice of trading without risk;
  • Try new trading strategies.
Most online brokers provide beginning traders with a free demo account. The broker thus offers the opportunity to highlight the quality of its trading platform and to retain the investor.

Set clear goals

Simple, measurable, applicable, achievable and limited in time: this is how the SMART method would define a quality objective. In this case, this raises several questions about your business objectives:
  • What added value do you want to achieve and how often? Is it a salary supplement? Do you want to make a living from trading or just want to free up some free time, or even just invest for fun?
  • What means are available to achieve your goal? Do you have quality equipment (computer, software, connection), are you sufficiently well trained, how much free time do you have each day, week or month?
  • Does your goal take into account your level of knowledge, your initial capital and the time you have to manage your investments?
  • How fast do you want to achieve your goals? Do you have a fixed term or, on the contrary, monthly, annual?

Identify your risk profile

As an investor, your risk profile defines the amount of capital you are willing to invest, as well as your trading style. Your profile can be divided a priori into four states:
  • extremely defensive;
  • defensive;
  • dynamic;
  • extremely dynamic.
These terms define to what extent the investor is risk averse or, on the contrary, attracted to active management of their capital. Depending on your risk profile , it will be easier to assess the budget to invest, the expected return on investment (ROI), as well as the strength of the leverage effect that will be implemented on your positions.

Criteria such as age, professional and personal situation, as well as psychology (resistance to stress) allow you to better orient your risk profile.

Learn to control your emotions

If high-frequency trading is gaining an increasing share of the financial markets, it's because algorithms are emotionless.

The first loss factor in investing is, in fact, emotion. Although one immediately thinks of the impact of stress and pressure when entering and exiting a position, other emotions must be taken into account.

Between them:
  • the frustration of a losing deal;
  • fear of losing their capital;
  • anger at unexpected trend moves;
  • the euphoria that delayed leaving office too long;
  • the addiction that pushes you to take a stand too often.
This is the whole point when you go from a demo account to a real account: the emotions will increase tenfold and, in fact, they will be more complex to manage.

Thus, the most advanced theoretical training will remain insufficient until you have done long-term work on yourself. You will quickly understand that a healthy and balanced lifestyle accompanied by sports and meditation practices may be necessary to support the stimulation of long-term financial investment .

Start with passive management

This reinforces the famous theory of market efficiency, according to which it is impossible to beat the market. If this hypothesis is debated, the fact remains that 90% of retail speculators lose money in the long run. Therefore, passive management allows you not to aim to beat the market, but only to replicate its performance.

In this way, your risk is greatly reduced and you can ensure a more stable income. Practices like diversification and time in market (which aims to take a position as early as possible to maximize profits over time) correspond to this idea of ​​passive management.

Surround yourself with other investors

Whatever the practice, the stimulation is always stronger when accompanied. The same goes for investing in the stock market. Participating in the community of individual traders through forums and webinars is a first step, but you can also find a constantly encouraging mentor or investment partner to share your respective discoveries with.

The key is to be proactive in this process to surround yourself with people who are motivated, supportive and, if possible, experts in their field: the search for excellence requires perseverance.

Pay attention to brokerage fees

The notion of passive management; It also has the advantage of reducing brokerage commissions since it does not require the work of as many intermediaries as active management. In fact, brokers and banks will charge multiple brokerage fees, such as:
  • commissions (spreads);
  • filing fees;
  • withdrawal fees;
  • child care costs;
  • subscription fees (as applicable);
  • management expenses;
  • additional costs.
If the average amount of brokerage commissions has been divided by 10 over 10 years, it is still imperative to adopt solutions to offset these costs that, in the long run, weigh on your capital gains. Therefore, it is better:
  • compare brokerage offers based on fees included;
  • place your orders online and not by phone or branch;
  • choose your broker according to your specific needs.

Diversify your wealth

There are several ways to diversify your stock portfolio :
  • vary asset classes;
  • vary investment sectors;
  • vary the level of market capitalization of the chosen companies;
  • Geographical areas vary.
Also, it is commonly accepted that investing more than 5% of your capital in a position is not very prudent: therefore, make sure to limit the amount of your investments , even if you are sure of success in your trade.

Consider currency risk

While Forex allows many investors to create capital gains from the change in exchange rates between two currencies, currency risk remains a major driver of loss.

By investing internationally, you automatically expose yourself to this financial risk. Remember to take into account these variations in the relative values ​​between two currencies to take advantage of them instead of reducing your capital gains.

Beware of insider trading

Insider trading is not based on rumors, but on solid information. The only drawback: to be exploited, the information must be public. Any investor who benefits from private information and uses it to invest before its publication is committing insider trading.

There are two types of insider trading:
  • direct abuse of privileged information (where the person is the source of the information);
  • Indirect use of privileged information (where the person is an intermediary and accesses the information through his role: bank employee, lawyer, trustee, etc.)

Stay away from dream sellers

When doing your research online, you will come across many advertisements promising easy riches on first come first served. Understand that if this were the case, everyone would already be rich in the wonderful world of stock investing.

Also, if you happened to discover a miracle recipe that guarantees you a guaranteed return, would you really want to share it with your potential competitors? Because you have to understand one thing: the 10% of profitable Traders would not exist without the 90% losers. Thus, the potential gains are always proportional to the risk.

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